Automatic Data Processing (ADP) Valuation Check After Jefferies Downgrade and New Product Launches

Automatic Data Processing (ADP) just got knocked down a peg by Jefferies, which shifted to an underperform view as it reassesses the company’s long term growth profile and earnings power.

See our latest analysis for Automatic Data Processing.

The downgrade comes after a choppy stretch for the stock, with the latest share price at $262.17 and a roughly 9 percent year to date share price decline. At the same time, multi year total shareholder returns remain solid, suggesting momentum has cooled despite ongoing product launches and ADP’s long dividend track record.

If ADP’s mixed momentum has you reassessing your options, this could be a good moment to explore other established healthcare stocks that might offer a different balance of growth and resilience.

With shares now trading at a discount to some analyst targets, but with long term returns already rich, the real question is whether ADP is quietly undervalued here or if the market is already pricing in its next leg of growth.

Most Popular Narrative: 32.4% Undervalued

According to yiannisz, the narrative implies a fair value far above ADP’s last close of $262.17, framing today’s pullback as a potential mispricing rather than a warning sign.

According to a recent discounted cash flow (DCF) analysis, ADP’s fair value is estimated at around $387.77 per share, while the stock trades at approximately $279.63, suggesting it may be 27.9% undervalued. That is a notable gap for long-term investors, if the company can execute on its AI-driven ambitions without eroding profitability in the short run.

Read the complete narrative.

Want to see why a mature payroll giant is associated with such a punchy upside case? The narrative focuses on resilient cash flows, steady growth upgrades, and a future earnings multiple usually reserved for premium software platforms. Curious which specific assumptions turn a steady compounder into a high conviction value story? Explore the details to see the full framework behind that fair value estimate.

Result: Fair Value of $387.77 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, slowing AI adoption or prolonged margin pressure from higher tech investment could challenge the upbeat valuation case and delay any rerating in the shares.

Find out about the key risks to this Automatic Data Processing narrative.

Build Your Own Automatic Data Processing Narrative

If you see the story differently or want to stress test the assumptions with your own model, you can build a custom narrative in under three minutes: Do it your way.

A good starting point is our analysis highlighting 4 key rewards investors are optimistic about regarding Automatic Data Processing.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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